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Is too much customer choice ruining your revenue?

15th Feb 2023
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Having a lot of choices is a blessing—until you have too many. Unfortunately, too many options can become a curse. Today, let’s look at how the number of choices could thwart your customer’s decision to buy and destroy your revenue. 

I have had this problem many times, but most recently regarding purchasing a heater for my home. I went to Amazon to pick one and was quickly overwhelmed by my options. I didn’t want to make the wrong decision, but I had no idea how to make the right one. I know nothing about the significance of kilowatt hours, EER ratings, or the nuances of fan-forced vs. convection vs. radiant/infrared options. Without that understanding, how could I sort through the options and know what was the right choice?

Decisions are more straightforward with fewer options, particularly when unfamiliar with the product or service. However, if you ask people whether they want fewer or more options in any given offering, they will almost always say they want more. Then, when you give them more options, they get frustrated and have a negative experience. 

Barry Schwartz’s book The Paradox of Choice does an excellent job addressing this topic. His Ted Talk (with 5.5 million views) describes some of its concepts.

Schwartz describes the conflict between people wanting more choices and having negative experiences from having so many options to sort through. One of the outcomes can be feeling less satisfied with the choices they make. Another worse outcome for companies is when people decide not to choose and walk away from the buying decision. 

There are a couple of psychological reasons that explain this common human phenomenon. 

  1. Too many options demotivate us. In this situation, the amount of choice overwhelms our decision-making capabilities, and we move on.
  2. The more options we have, the higher our expectations are. When we have a lot of choices, our reference points for what is acceptable also increase. 

I have a couple of examples that demonstrate what I mean by this.  

Regarding the first reason, the number of heater options on Amazon is not the only thing that has overwhelmed me recently. For example, I went into a big box liquor store to choose craft beer for a World Cup gathering in December. Naturally, I wanted to choose a good one for my guests. However, after what felt like four hours in the store, I left empty-handed. There were too many options to sort through, and I gave up. It turns out you need a few beers before you can choose a beer. 

I also have experienced changing my expectations based on the number of options available. In addition to heaters and beer, I am in the market for a new TV. When I began my quest to find the best one, I didn’t have that many features I was keen to upgrade. However, after comparing models in my (online) research, I am way down the rabbit hole on the slight difference between the various TVs. Why? I have been parsing my options carefully because I don’t want to make the wrong decision on my TV. I don’t want to be kicking myself six months down the road because I didn’t cough up the additional $100 for some gizmo I didn’t understand at the time. 

However, if I had two TVs to choose from, I would have picked one already and been watching it with or without said gizmo and feel complete satisfaction. The number of options has changed what I find acceptable. 

Here’s another non-purchase decision that demonstrates this second reason. People who grew up in the States will recall when TV programming was around three or four choices each evening; what was on ABC, CBS, NBC, and a local station (if you were lucky). You chose the best one from those options, and that was that. 

However, once cable became widespread, there were suddenly more options. People would then flip through the channels watching snippets of different media in some cases before moving on. It was called channel surfing.

Today, we sometimes spend all our TV-watching time choosing. I admit there have been times when I sat down to watch Netflix, spent 45 minutes comparing possibilities as I scrolled, always looking for a better option on the next screen, and then got up having chosen and watched nothing.  

So, What Can You Do To Make This Easier for People?

As an organization that wants to make it easier for people to choose you, chances are you neither want to overwhelm people and frustrate them or throw them into a situation where they have to get a Ph.D. in your product or service to choose you. To that end, here are a few things you can do to make choices easier for people:

  • Curate their options: If there are a million ways to go on a decision, try grouping a smaller set of options to push toward your customer to give them a more specific starting point. For example, if the customer wants a craft beer, show them the ten most popular varieties to sort through first. Then, customers feel the benefits of all the choices without being overwhelmed. 
  • Resist the temptation to crowd too many choices in the curation: There are many great options; we get that. However, pushing too many “popular” or “just for you” options will negate the benefits of the exercise. Please keep it simple for the curated options. 
  • Testing is vital:  As an organization, test the available variations and see what does best and, perhaps more importantly, what isn’t doing great. Having options nobody wants clutters up the decision and could drive people away. 
  • Filters help customers choose:  When presenting options, provide filters that help people narrow down their choices. For example, Amazon and many other retailers allow people to decide by brand, price, Prime eligibility, review-rating average, color, and many more. These are great ways to help customers sort through vast options and get to a manageable amount. 

As humans, we love our choices but hate feeling like we made bad decisions. Unfortunately, too many options raise the chance that we will do just that. In some cases, we give up; in others, we become obsessed with finding the best possible options and delay our decision, sometimes indefinitely. If you want the humans to choose from your buying options, make it easy for them. So, optimize your decision-making experience for them by disciplined curating, testing, and culling your offerings and providing them tools to filter their options. Fail to do so and those overwhelmed humans might find your competition’s choice much more manageable. 

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